ENB Holding, San Marcos National Plan to Merge

Hoping to maintain their individual, community-based identities, but also desirous of the benefits of a larger financial institution, two financially healthy independent North County banks agreed Thursday to merge.

In an all-stock exchange, ENB Holding Co., parent of Escondido National Bank, and San Marcos National Bank said they have signed a letter of intent to merge.

If the deal is completed, the combined companies will have assets of more than $123 million.

Each bank will retain its own name, directors, management and staff, officials said.

The merger proposal requires approval both from shareholders and several regulatory agencies--a process that could take at least six months, according to Harvey Mitchell, ENB president and chief executive.

Mitchell and Harvey Williamson, who is president and chief executive of San Marcos National Bank, have “talked in the past about how comparable our operations were in two strong growth areas,” Mitchell said in an interview Thursday.

“If this works well,” Mitchell said, “our two banks can continue to be community banks, respond to the needs of customers and have some of the advantages of a larger bank.”

One advantage is that each bank will be allowed to increase its upper lending limit, which is pegged at 15% of total capital.

The demographics of each bank’s customer area are similar, Williamson said. “By working together, we’ll be able to serve larger organizations. There is safety in numbers.”

More than 80% of the combined banks’ loans are business and commercial loans, said Mitchell.

According to industry analysts, the merger of small, financially sound banks is on the upswing in anticipation of interstate banking, which opens in the West this summer.

Late last year, the holding companies for First National Bank, National Bankshares of La Jolla and National Bank of Fairbanks Ranch agreed to combine their banks in what was billed as the first “merger of equals” in the West. That merger will be completed in February or March.

ENB ended 1986 with $92.6 million in assets, up 41%; $520,207 in earnings, up 25%, and a 7.5% capital-to-assets ratio.

San Marcos had assets at year-end of $30.5 million, up 15%; $267,000 in profits, up 17%, and an equity ratio of 11%.